Poltrack Sees Broadcast Ad Revenues Up 7.3%

CBS chief research officer David Poltrack might as well
have been wearing sunglasses as he gave his forecast for the broadcast business
to an investment conference on Monday.

In a sunny forecast, Poltrack said that broadcast was
improving its standing with viewers, with advertisers and with distributors.

"Broadcast network television not only remains the
dominant mass medium today, but that it has enhanced its mass medium status by
amassing viewers through new distribution channels," he said to the 39th
annual UBS Media and Communications Conference in New York.

He pointed to new research that shows that broadcast
advertising is more effective than commercials on cable and predicted that
broadcast would begin to gain share against cable.

In the short term, Poltrack predicted that broadcast
network ad revenues would be up 7.3% in 2012.

While the state of the economy has created some concern among advertisers,
fourth quarter scatter prices remain above upfront levels.

"The latest
economic setbacks have resulted in the advertisers operating under a â€˜caution'
flag during the fourth quarter of 2011," Poltrack said. "They are jockeying for
position, conserving fuel, and fine-tuning their race strategies, but no one
has dropped out of the race. As soon as the economic clouds clear and the green
flag is given, they will begin competing at full throttle to capture a share of
the increased consumer spending. The only question is when they will see that
green flag."

So far this
season, the commercial ratings used for buying and selling advertising are up
for the broadcasters overall, with Fox (thanks to a seven-game World Series
with high viewership and little DVR use) and CBS showing gains among both
adults 25-54 and adults 18-49.

At the same
time, the ratings of the top 10 cable networks in terms of ad revenue are down.

CBS and other
broadcasters are also picking up viewers online. CBS has increased the commercial
load on its full-episode power to 14 ads per hour.

"What that means
is that a viewer streaming our program online is now worth substantially more
to us than a person watching that program in playback mode and skipping many of
the commercials," Poltrack said. "In fact, the value of the online viewer is
now surpassing that of the live viewer as well."

He added that
VOD is growing as a distribution medium for primetime network programming. "At
CBS we have seen a 19% increase in VOD viewing of our primetime series this
fall," he said.

Increased
viewership is one reason why the cable networks 52% share of ad dollars might
be as high as it gets. In fact, the trend might reverse and start to come down,
according to Poltrack.

"We have
isolated 36 product categories each with over twenty million dollars in spending
between broadcast and cable and over 60% of that money going to the cable networks,'
he said. "Just getting these categories back to the all-category 48/52 split
would add $344 million in broadcast network spending."

Poltrack said
that single-source research from companies like TRA allow marketers to figure
out the return on investment for each part of their ad campaigns.

"Recent work by
TRA has specifically addressed the issue of the broadcast/cable mix of
television campaigns," he said. "In this work, TRA found that campaigns with
over 50% of their GRPs on the Broadcast channels delivered consistently higher
ROIs than campaigns with over sixty percent of their GRPs in cable."

CBS is working
with consumer package goods marketers who tend to buy cable because of its
lower CPMs, to use single-source data from TRA and Nielsen's Catalina
Solutions, to show that lower CPMs are less relevant compared to the superior
ROI of broadcast network campaign.

"I believe that
this new research capability will motivate advertisers to shift ad dollars back
to broadcast primetime," Poltrack said.

Poltrack also pointed
to new tools being made available to planners and buyers that allow them to put
shows on a media plan based on actual product consumption rather than the more
traditional age and sex based demographic.

"Volumetrics
enables Nielsen Catalina Solutions to define television audiences for advertisers
in terms of actual product purchase behavior as opposed to surrogate demographic
measures," Poltrack said. "The application of this form of audience evaluation
often substantially changes the relative ranking of programs."